© Reuters. To correspond to the special report CHESAPEAKE-MCCLENDON / LOANS
By David French and Rama Venkat
NEW YORK (Reuters) – Chesapeake Energy Corp (N ? filed Chapter 11 on Sunday, becoming the largest US oil and gas producer to seek bankruptcy protection in recent years as it complies with heavy debts and the impact of the coronavirus epidemic on energy markets.
The filing marks the end of an era for the Oklahoma City-based shale pioneer and comes after months of negotiations with creditors to lay the groundwork for the restructuring. Reuters said for the first time in March that the company had retained the services of debt advisers.
For more than two decades, the late savage Aubrey McClendon made Chesapeake one of the world’s largest producers before resigning in 2013 after a crisis in corporate governance and investor concerns over high spending.
At the time, current CEO Doug Lawler inherited a company with approximately $ 13 billion in debt. Lawler managed to nibble on the debt heap with spending cuts and asset sales, but this year’s historic oil price rout didn’t allow Chesapeake to refinance that debt.
“Although we have removed over $ 20 billion in leverage and financial commitments, we believe this restructuring is necessary for long-term success and the creation of business value,” Lawler said in a statement. press release announcing the filing of the complaint.
As part of the restructuring plan, Chesapeake will eliminate approximately $ 7 billion of its debt, the statement said. Separate court records have indicated that Chesapeake had more than $ 10 billion in liabilities, while its assets were also listed as valued at more than $ 10 billion.
The company has entered into a restructuring support agreement, which has full lender support for its main revolving credit facility – some of which provide $ 925 million in debtor in possession (DIP) financing that will help support its operations during bankruptcy. procedure.
The agreement also enjoys the support of parties from other categories of creditors, including those who are responsible for 87% of its term loan, and holders of approximately 60% and 27%, respectively, of its Secured first rank notes maturing in 2025 and its unsecured senior notes.
Although the statement does not name the creditors of Chesapeake, investment company Franklin Resources (NYSE ? is among the largest. On June 15, Reuters announced that the impending restructuring of Chesapeake would cede control of the company to creditors , including Franklin.
Chesapeake has also agreed to the main terms of a $ 2.5 billion exit financing, while some of its lenders and guaranteed note holders have agreed to support a $ 600 million offer of new shares to take place. at the end of the chapter 11 process, adds the press release.
Chesapeake will be the biggest bankruptcy of an American oil and gas producer since at least early 2015, when the law firm Haynes & Boone began publishing data on the restructurings.
The case was filed with the US bankruptcy court in the South Texas district. Chesapeake’s advisory team includes investment banks Rothschild & Co and Intrepid Partners, law firm Kirkland & Ellis LLP and turnaround specialists Alvarez & Marsal.
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